Third quarter 2021 results

ING posts 3Q2021 net result of €1,367 mln

Steven van Rijswijk, CEO of ING

4 November 2021

Key points

  • Focus on climate action continues to accelerate and we actively engage with companies to finance the investments needed for the transition to a low-carbon economy
  • Strong pre-provision result, supported by continued strong fee income, higher lending margins and negative interest rate charging as well as cost control, despite ongoing margin pressure on customer deposits
  • Net core lending growth was €3.1 bln, reflecting continued mortgage growth in Retail and repayments in Wholesale
    Banking. Net core deposits growth was €-0.6 bln
  • Fee income remained strong, up 20% YoY. Daily banking fees increased reflecting higher package fees and a recovery of domestic payment transactions. Lending fees increased, while YoY also investment product fees were higher
  • Risk costs were €39 mln with a stable Stage 3 ratio at 1.5% and we are confident about the quality of our loan book
  • 3Q2021 CET1 ratio was slightly higher at 15.8%, with 50% of 3Q2021 resilient net profit reserved outside of CET1 capital for distribution

2

A sustainability leader supporting our clients in the transition

We published our integrated climate report

  • The 2021 climate report integrates our progress on climate alignment of our loan book and climate risk management
  • On climate alignment, 5 of the 9 sectors covered by our Terra approach are within the decarbonisation pathway per our initial Paris-aligned ambition as we set in 2018
  • We raised our ambition to reach net zero by 2050 and will update the sector targets
    • For upstream Oil & Gas we have already set a more ambitious net zero target to reduce funding (from 2019 levels) by 12% by 2025
    • Net zero targets for other sectors will be adjusted based on industry transition scenarios
  • On climate risk, we have made further progress on embedding climate risk considerations into our risk management framework, with main progress on heat mapping and scenario analysis

We support our clients in the transition to a low-carbon economy

€1.35 bln Green securitisation

1st green asset-backed security for a data centre provider

Development of a Green finance framework for the use of proceeds of green loans and bonds

Sustainability deals* (#)

200

124 139

64

28

2017

2018

2019

2020

9M2021

* Sustainability deals include sustainability loans and bonds, green loans and bonds, sustainable structured finance, social loans and bonds, and sustainable investments

3

Strong pre-provision result reflecting continued fee growth

Pre-provision result excl. volatile items* and regulatory costs

(in € mln)

2,215

2,014

2,054

2,009

1,878

3Q2020

4Q2020

1Q2021

2Q2021

3Q2021

  • As both income and costs improved, this quarter's pre-provision result excluding volatile items and regulatory costs increased ~10% both YoY and QoQ
  • 3Q2021 pre-provision result was comparable to pre-Covid-19 levels, although with a changing composition of income as fee growth compensated for NII pressure
  • The share of fee income increased to ~19%. We consider this higher fee level mostly structural with room for further growth in line with our 5-10% growth ambition
  • While pressure on liability income continues, NII has been resilient
    • Focus will remain on healthy lending margins and a recovery of loan growth with business clients
    • 3Q2021 NII was also supported by lower negative interest rate charging thresholds in Retail Benelux and high pre-payment penalties on mortgages in the Netherlands, while liability margin pressure will continue and the impact is not linear
  • Good cost control, with cost savings absorbing CLA-related increases

* As included in volatile items on slide 18

4

The quality of our loan book is strong

Risk costs compared to peers* (in bps of customer lending)

263

210

247

47

58

97

101

134

134

136

153

158

177

36

37

54

54

60

74

77

90

112

120

137

25

27

Average 2008-1H2021 (bps) Maximum 2008-1H2021 (bps)**

Stage 3 ratio compared to peers*

5.4%

4.7%

3.9%

3.4%

3.2%

3.0%

2.1%

1.9%

1.5%

1.4%

1.7%

1.5%

2016

2017

2018

2019

2020

1H2021

ING

Eurozone peers average

  • In 3Q2021 we released €96 mln of management overlays applied in previous quarters, reflecting a recovery of economic activity, robust GDP forecasts and improved risk indicators on our loan book
  • While defaults in our loan book have been limited, the additional monitoring and provisioning for sectors vulnerable under Covid-19 remain in place
  • As economies re-opened, the surge in demand brings new challenges with strained supply chains, staffing shortages and rising prices. We closely monitor our loan book also given these market dynamics
  • We are supported by our prudent risk framework, which remained in place unchanged under Covid-19. This is evidenced by a strong loan book, with risk costs and a Stage 3 ratio well below eurozone peers
    • Well-diversifiedloan book in terms of product type, client segment and geography
    • Senior ranked and well-collateralised with the majority of exposure to investment grade customers
    • Historically provisioning has been more than sufficient to cover actual write-offs

Source: Bloomberg, Annual disclosures

* Eurozone peers include ABN AMRO, BBVA, BNP Paribas, Commerzbank, Credit Agricole, Deutsche Bank, Intesa Sanpaolo, KBC, Rabobank, Santander, Société Générale and UniCredit

5

** Highest number of bps in a calendar year

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ING Groep NV published this content on 04 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 November 2021 06:11:02 UTC.